Review of Best Currency Exchange Credit Card for Canadians
When making purchases in a foreign currency, paying in cash is one of the most common options used by Canadians. But it’s often not a convenient option. When travelling I can only carry so much cash on me before I start to feel paranoid about losing it, or worse being robbed of it at knife-point, or even worse… Setting my paranoia aside, I’m very careful about keeping track of and concealing my cash while traveling, so as unlikely a scenario as this might be for me I’d just rather not have to worry about carrying a large amount. Also, with global online commerce spreading like wildfire and the growing number of deals to be had from foreign merchants selling their wares in foreign currencies, paying cash is not even an option. So what’s the next best option? Plastic, your trusty credit card!
Credit cards are a convenient way to pay for purchases both online and while travelling outside Canada since they’re accepted almost anywhere, but what many people don’t realize is that most Canadian credit card issuers (which are mainly banks) tack on a 2.5% fee to every foreign currency transaction. They conveniently convert all your purchases made in foreign currencies to Canadian Dollars at the exchange rate set by Visa or MasterCard (depending on whose card you’re using), but what is not commonly known is that they are blending an additional 2.5% fee on top of that into the exchange rate they charge to you. If you charged just the equivalent of CAD $2,000 in any foreign currency to your credit card, odds are you just got hit up for an extra $50 by your credit card issuer (likely a bank).
How can you avoid this 2.5% foreign currency exchange fee when paying by credit card you ask? For Canadians there’s only one game in town: Chase Canada. Chase Canada offers a handful of no foreign transaction fee credit cards for you to chose from, now which Chase card is best for you depends on which rewards will be most valuable to you. I like to carry both a Visa and Mastercard option in my wallet to ensure I’ve got the bases covered in case a merchant only accepts one or the other, so I’ve listed the one of each that I keep in my own wallet. I’m a big fan of no-fee credit cards so that’s definitely influenced my choices, but which one is best for you may differ so be sure to review the options yourself.
My Top Pick: Chase Amazon.ca Visa
- Annual fee: $0
- Approval bonus: $20 credit to spend at Amazon.ca
- Rewards: 2 points for every $1 spent on Amazon.ca and 1 point for every $1 spent everywhere else.
With the Chase Amazon.ca Visa, when you reach 2,000 points they are automatically redeemed for a $20 statement credit (I like that this requires no action on my part so that there are no forgotten points left behind). This essentially translates to 2% cashback on purchases at Amazon.ca and 1% cashback on purchases made everywhere else. I’m a big fan of cashback credit cards since you’re not limited in what you redeem your reward points for (e.g. only flights or only hotels etc…), and while this is not the best cashback offer among all the credit cards out there, when looking to save that 2.5% fee on foreign currency purchases this card is my top pick.
Back-up: Chase Sears Financial Mastercard
- Annual fee: $0
- Approval bonus: $30 worth of Sears Club Points
- Rewards: 2 points for every $1 spent at Sears Canada stores or at Sears.ca and 1 point for every $1 spent elsewhere
1,000 Sears Club Points are worth $10, so similar to the Amazon.ca Visa you get 2% back for purchases made at Sears and 1% for purchases made everywhere else, but the big catch here is that you can only reedem at Sears. This significantly limits your redemption options compared to cashback, which is why I only keep this as a backup to my Amazon.ca Visa for the rare occasion where a merchant only accepts MasterCard.
Other no foreign currency transaction fee cards offered by Chase Canada are the Marriott Rewards Visa that offers 5 free nights at Marriott hotels upon approval and allows you to earn Marriott Rewards Points; as well as a premium version of the Sears Financial MasterCard that offers a total of $55 worth of Sears Club Points by time you’ve completed your first purchase and also allows you to earn Sears Club Points at a higher rate than the basic version. However, the big con of both of these cards in my view is that they charge annual fees, $120 and $39 respectively. The Marriott card does waive the fee for the first year so that makes it a worthy option for the bonus rewards alone, just remember to cancel before your first year is up if you don’t want to be paying a $120 fee every year.
While the exchange rate itself is not likely to differ from card to card, you can avoid the foreign currency exchange fee charged by all issuers except Chase.
Large US dollar Currency Exchanges
Credit cards are very convenient, but cash remains a required option for places that don’t accept them. On property purchases, tuition payments and investments a credit card is just not an option. Banks charge huge exchange fees, so using a currency exchange service will ensure you are getting a better currency exchange rate. When you’re exchanging your Canadian dollars to US dollars remember to check in with KnightsbridgeFX.com to get an exchange rate better than the banks will offer and save even more!